And Just When You Thought Toronto Was Expensive…

But the following example combines the two biggest problems in Toronto real estate: rising prices, and shrinking unit size.

A few years back, I lamented that condos in new-construction were getting smaller and smaller, and pointed to all the 300-square-foot units at “Art Shoppe.”

But last month, a 150 square foot condo smashed records in Sydney, Australia, so maybe we’re not the only ones with a real estate “problem”…

2015, wow.

Two years, and like 25-30% ago!

All joking aside, time flies, but the trends remain the same: rising prices and shrinking condo sizes.

The blog I’m referring to was titled, “Living Inside A Box,” and I even found a great picture of a guy literally living inside a box, to go along with the blog.

In the post, I showed off floor plans for the new “Art Shoppe Condos” at Yonge & Eglinton, which with their 325, 336, 379, 424, 478, 510, 521, 558, 590, 607, 689, 697, 756, 809, and 882 square foot models, the developer clearly showed how condo sizes were rapidly shrinking.

And FYI – those models from 590 square feet and up were 2-bedrooms.

The condos are shrinking in size, of course, because developers are building for investors, and not for end users.

Investors buy more pre-construction condos than end users do, after all.

Have you ever been inside a 325 square foot condo?

They’re obviously quite small, and not that functional, but in Toronto the functionality is far worse, since developers just build a smaller version of a larger condo, rather than implementing innovative, space-saving features.

Have you ever seen the TV show “Tiny House” on HGTV? I’m embarrassed to say that I have, but only because my wife watches it, and she can do whatever she wants without judgment since she’s mother to a newborn…

Toronto seems like the one place where tiny houses, or in this case, condos, don’t really get the Innovation Award.

And at an average of $930/sqft for the units at the Art Shoppe, who the hell is buying there anyways?

On Thursday, I filmed a Pick5 segment on the average price per square foot of downtown, 2-bed, 2-bath condos, which I suggested was around $650 to $700.

That sure puts the $930/sqft at Art Shoppe into perspective, but that’s a topic for another day…

The condo I wanted to talk about today isn’t in downtown Toronto, or even in midtown like Art Shoppe.

It’s a little bit further than that.

It’s in Sydney, Australia.

We often make comparisons to New York or London, but we rarely venture into another hot market, which at the moment, is absolutely red-hot.

In December, a micro-condo of only 150 square feet was sold for a whopping $350,000.

The Aussie dollar is almost even with the Canadian dollar, so call it a wash for discussion purposes.

Here’s the floor plan:

It’s in metres, like any good member of the Commonwealth. Shame on us Canadians for using square feet…

Here are some photos of the unit, in all its glory:

There’s nothing quite like being able to sit on your toilet, and chop veggies on your kitchen counter, is there?

I’m not sure if you guys did the math on this one yet, but that’s actually the bigger story here.

Sure, a 150 square foot condo is small, but we’ve seen smaller.

Recall that ridiculous 78 square foot condo in Manhattan from back in 2011-12:

But that’s a novelty that makes for a weird video.

This condo in Sydney actually sold, and sold for a lot.

$2,333 per square foot.

That’s more than TRIPLE the average price per square foot in downtown Toronto these days.

So as is the theme every time we turn on CNN these days, remember, “It could always be worse.”

We may find ourselves in a red-hot Toronto market, and prices may have appreciated massively in 2016, but a quick Internet search will show you dozens of cities around the world where people would kill to pay only $700 per square foot.

Oh – and to live in a condo as big as 325 square feet? That’s just a dream to many of them…

Wow, great, so prices are out of whack in Australia too. This doesn’t convince me at all that real estate in Toronto is rational.

All it does is lend further evidence to the massive distortion being caused by the trillions of dollars of capital outflows currently hemorrhaging out of China. When their government finally clamps down on outflows, or the Chinese debt crisis materializes, look out below!

Just before the housing crash in 1990, the conventional wisdom of the day was that real estate prices were still cheap in Toronto because they were lower than several other large cities around the world. So one could be cautious about the current same argument.

That being said, Toronto has really grown up and has changed massively for the better since 1990 and so perhaps those comparisons are more justified now.

I grew up in 4,000 – 5,000 SQ FT homes so my current house of 2,300 SQ FT (excluding a finished basement) feels small to me. But today’s post sure makes me feel better!

Sydney and to some extent Melbourne make Toronto look like a bargain. I just got back from NYC, where $850K gets you a studio on 6th Ave. new pre con in Boston is $1400 PSF. Having been elsewhere in the world TO is definitely undervalued. $800-$1000 PSF for non-Yorkville product will be the reality in another 5 years.

Very interesting blog today David and I love the video too. I think the way things are going right now in Toronto and Vancouver it’s safe to say that we are heading more in the direction of other large metropolitan world cities in Asia, Europe, in NYC and it seems like Sydney too in terms of smaller more compact urban apartments. I think up until now we have been spoiled in Canada and are used to living in much larger spaces than other countries of the world but I believe our expectations of urban living may have to change if we continue to want to live in urban areas. In fact I lived for a third of my life in Italy in both Milan and Rome where it’s not uncommon for a family of four to live in a two bedroom, one and a half washroom of approx 700 sq feet. Anything above 1000 sq feet in these two expensive cities is considered luxurious! When we moved back to Italy for a while into 1400 sq feet apartment we thought it was so small coming from Canada although all our fellow friends and family members there thought we were lucky to have so much space. Then when we moved back to Toronto years later we were amazed at how much space we could find and how cheap it was compared to Milan and Rome. Yes it’s true Toronto prices have increased a lot since then (1994) but it is still more expensive per square foot in Italy than it is here and I’m willing to bet pretty much anywhere in Europe that’s on par with Toronto (London, Paris, Madrid, Zurich, Berlin). The apartments in Europe though seem to be better equipped to dealing with less space with more compact kitchens (small fridges as people tend to shop almost daily for food and not in bulk like in North America) and we don’t have walk in closets there but rather armoires that you buy custom built to fit the bedrooms and then take with you when you move. We also don’t have king beds, queen is the biggest you would find there so easier to fit in smaller apartments. It’s crazy to think that builders are building and selling such small apartments like the Art Shoppe ones you mention David but I guess the demand especially for millennials and investors is there right now. I agree with you David that the prices are ridiculous though compared to resale prices of larger units in the same area. What I find is the biggest paradox happening right now in our city is the two extremes between smaller and smaller shoebox condos and then the flip side is these huge monster like houses that keep getting built on the larger lots where small 1950s-1960s side splits and bungalows used to be. I see this happening a lot in the Yonge and Sheppard/Finch corridor, Banbury/Denlow area, Leaside and even in the suburbs like old Oakville and Markham village. Surely there has to be a happy medium between the 750 sq foot condo and the 5000+ sq foot monster home. If families want to stay in the city there isn’t much choice. Builders need to start building more townhouses and larger family friendly condos to meet the demand of people who prefer not to live in such small spaces and that don’t want to move to the suburbs to get more space. My first condo at 28 was a one bedroom one bathroom 650 sq foot condo and I thought that was super small coming from my parents large detached house. I can’t imagine squeezing another bathroom and bedroom into that space now! I have to say if this is the way we are heading I feel really bad for millennials and the generations after as they won’t be able to have the same standard of living as previous generations had.

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The preceding commentary is the opinion of David Fleming and does not represent the interests or opinions of Bosley Real Estate Ltd., Brokerage or the Toronto Real Estate Board. Therefore, Bosley Real Estate will not be held responsible and/or liable for any of the opinions herein.